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deduct 18 percent of certain energy expenses6 petitioners
incurred during 2003.
Notwithstanding that 18 percent of petitioners’ home was
used as Mr. Soholt’s principal place of business, we cannot
accept certain documentation petitioners introduced that appear
to be expenses for remodeling their kitchen. We must disregard
these kitchen remodeling costs because the kitchen was not part
of the home used exclusively for Mr. Soholt’s business.
Petitioners are therefore entitled to deduct only 18 percent of
the energy expenses, which equals $467.7
Internet Access Expenses
Petitioners claimed $317 for Internet access expenses during
2003. We have previously characterized Internet expenses as
utility expenses. Verma v. Commissioner, T.C. Memo. 2001-132.
Strict substantiation therefore does not apply, and we may
estimate the business portion of utility expenses under the Cohan
rule. See Pistoresi v. Commissioner, T.C. Memo. 1999-39.
The parties stipulated that petitioners paid $317 for
Compuserve in 2003. Mrs. Soholt provided credible testimony
6The parties stipulated that petitioners paid $1,180.30 to
Center Point Energy, $833.84 to Xcel Energy, and $580.09 to the
City of Minneapolis Utility Billing Office in 2003, and
petitioners are entitled to deduct 18 percent of these expenses.
7We note that the deduction we permit for petitioners’
business use of the home would be subject to the income
limitations of sec. 280A(c)(5).
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